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Old Exam Questions  Capital Budgeting
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Year
0
1
2
3
4
Sales
$5,000,000.00
$8,000,000.00
$8,000,000.00
$5,000,000.00
Fixed Costs
$300,000.00
Variable Costs
$3,000,000.00
Depreciation
$1,138,500.00
EBIT
Interest
EBT
Taxes (40%)
NOPAT
Depreciation
$1,138,500.00
OCF
NOWC
Initial Investment
Shipping
Salvage
Tax on Salvage
Total GFA
FCF
PV
NPV
A.
$1,679,046.34
B.
$1,521,061.92
C.
$1,600,054.13
D.
$1,758,038.55
E.
$1,442,069.71
84.
You are given the following cash flow information for a project. Given this information,
and assuming that the correct riskadjusted discount rate (WACC) to use is 12 percent,
determine the net present value of this project. (Hint: you may also wish to solve for
IRR for use with the next problem).
Year
Cash Flow
Present Value
0
$10,000.00
1
$8,000.00
2
$4,000.00
3
$9,000.00
4
$8,000.00
5
$3,000.00
Total
A.
$2,643.93
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B.
$3,467.46
C.
$2,918.44
D.
$3,741.97
E.
$3,192.95
85.
You are given the following cash flow information for a project. Given this information,
and assuming that the correct riskadjusted discount rate (WACC) to use is 12 percent,
and that the firm’s true reinvestment rate is also 12 percent, determine the difference
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.
 Spring '08
 Staff

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